Wholesale Inflation Eases to 0.39% in May on Softer Food and Fuel Prices
India's Wholesale Price Index (WPI) inflation significantly declined to 0.39% in May 2025 from 0.85% in April, primarily due to easing prices of food articles, manufactured products, and fuel. Food articles experienced a deflation of 1.56%, with vegetable prices seeing a sharp drop. This trend aligns with easing retail inflation, which fell to a six-year low of 2.82% in May, prompting recent RBI interest rate cuts.
Unpacked:
The WPI measures price changes at the wholesale level, reflecting input costs for producers, while the CPI tracks retail prices paid by consumers. WPI is often used to assess inflationary pressures in production and trade sectors, whereas CPI directly affects cost of living and consumer spending.
A decline in WPI inflation can lower input costs for businesses, potentially leading to reduced consumer prices, increased purchasing power, and higher economic growth. Economists believe this trend could propel the economy toward a higher growth path, especially if supported by policy measures.
In response to the easing inflation rates, the RBI has cut interest rates. Lower rates are intended to stimulate borrowing, investment, and consumption, supporting economic growth during periods of low inflation.
The primary contributors to the recent WPI inflation decline include deflation in food articles, especially vegetables, and a slowdown in price increases for manufactured products and fuel. This broad-based easing across key sectors led to the sharp drop in May 2025.